New York Markets After Hours

PVH Corp. swings to loss on acquisition charges

AnnaPrior

PVH Corp. swung to a loss in the fiscal fourth quarter as the clothing company faced charges tied to its acquisition of Warnaco Group Inc., a deal that helped boost revenue.

Adjusted earnings topped the company's own forecast.

The company in December had warned of challenges during the holiday season, saying at the time it expected the critical period to be "very competitive and highly promotional." These views were echoed across the retail industry and many retailers have cited weak traffic and harsh winter weather as postholiday challenges in January and February.

Still, PVH has reported strong sales of late, bolstered by its $2.9 billion purchase last year of Warnaco, which licenses the Speedo brand and Calvin Klein underwear and jeans. PVH's own Tommy Hilfiger and Calvin Klein brands have also performed well.

In the latest period, Tommy Hilfiger revenue rose 1.2% to $902 million, as same-store sales in North America were relatively flat and rose 7% in Europe. The year-ago period also had an extra week. Meanwhile, Calvin Klein revenue more than doubled to $688 million, boosted by the Warnaco deal.

Citing negative impacts from planned investments, foreign currency headwinds, among other things, PVH for the year projected an adjusted profit of $7.40 to $7.50 a share on $8.5 billion in revenue, while analysts polled by Thomson Reuters had expected a profit of $7.81 a share and $8.6 billion in revenue.

For the fiscal first-quarter, PVH cited the "difficult macroeconomic environment" in issuing its "cautious" outlook, saying it sees an adjusted profit of $1.45 to $1.50 a share on $2 billion in revenue. Analysts had expected $1.70 a share and $1.99 billion, respectively.

Meanwhile, for the quarter ended Feb. 2, PVH reported a loss of $37.5 million, or 46 cents a share, compared with a year-earlier profit of $80.7 million, or $1.09 a share. Excluding expenses tied to the integration of Warnaco and related restructuring, among other items, adjusted profit fell to $1.43 from $1.60 a share.

Revenue jumped 25% to $2.05 billion, boosted by a $479 million contribution from the Warnaco businesses.

PVH had projected an adjusted profit of about $1.40 a share on $2.06 billion in revenue.

Gross margin narrowed to 52.1% from 53.8%.

Earlier Tuesday, the company said Calvin Klein Inc. Chief Executive Tom Murry will step aside from that role July 1, when current President and Chief Commercial Officer Steve Shiffman will take over as head of the apparel brand.

Shares edged up 75 cents to $118.00 in recent after-hours trading. Through Tuesday's close, the stock has risen 3.6% in the last 12 months.

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